We love the Lifetime ISA!

byCarole Jordan

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10 Apr, 2017

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Young people in the UK rejoice! From 6th April a new tax free savings account
will be available for UK residents aged between 18 and 40 years. The Uk government will also contribute to
the fund which must be used either for the first time property purchase or for
retirement.

What could the Lifetime ISA mean for you?

The Lifetime ISA allows you to save up to £4,000 per year,
which can be in cash and stocks and shares, in whatever proportion suits
you.

The UK government will contribute an additional 25% each
year until you use the funds to buy your first property. You must use a solicitor for this and the
funds are paid direct to them for the property purchase. You must also use mortgage lending to
purchase the property.

If your aim is to save for retirement, the funds become
available with the government bonus added, when you are 60 years of age.

So for those in the right age bracket this looks like a
great deal!

Can you have a help to buy ISA & a Lifetime ISA?

If you already have a ‘help to buy ISA’ you can transfer the
whole balance before 5th April 2018 if you wish, or run both
alongside each other. From 6th
April you’ll be able to only transfer £4,000 of your Help to Buy Isa each year,
which will use up your allowance.

There is now a variety of ways to save tax effectively and
also to boost your returns with interest rates so low. The total ISA savings limit for 2017/18 is
£20,000 and this can be deposited in a combination of the original cash or
shares ISAs, the existing Help to Buy ISA and now the new LISA.

Remember to also consider normal savings and investment
options as returns may be higher and interest has been tax free to a limit of
£5,000 from 6th April 2016.

So now is the time to take a good look at your savings, look
for the best savings rates, be sure you’re making the most of the schemes
available, getting any bonuses you qualify for and keeping your tax liability
down.

I love the summer for sitting back and reflecting on the
year. Thinking back to the dark days of
winter and forward to the joy of Christmas time. Now is the ideal time to review how your
business is going and as you revive yourself through holidays and sunshine
you’ll be well placed to make any changes come the autumn.